Why we need global change (1999)

Book Review from the October 1999 issue of the Socialist Standard

To solve the many problems confronting humanity what is needed is a change in the basis of world society from existing class ownership to a world in which the Earth’s resources have become the common heritage of all.

Think globally, act locally, say the Greens. Anyone who follows the news cannot help but think globally. World hunger, financial crises, currency fluctuations, global warming, the hole in the ozone layer, world poverty, trade disputes, war and the threat of war—all these are global problems. But act locally to deal with them?

Local action may be appropriate to protect some local tree or stop rubbish being dumped in some local back yard, but LETS schemes as the answer to world financial turmoil, buying Third World honey as the answer to world poverty, cycle lanes as the answer to global warming? That’s either a joke or a cop-out. Clearly, all these problems can only be solved by global action. We are up against a global system which can only be effectively and lastingly dealt with at that level.

Global capitalism

Globalisation is not just a recent phenomenon; it has been going on since the beginning of capitalism. Historian Immanuel Wallerstein has argued that capitalism has always been a “world-system” in the sense of being a network of many countries producing for a single world market, none of them powerful enough to dominate it and all of them having to submit to its pressures. In this sense capitalism is the world market and the history of capitalism is the history of the development and spread of the world market since it came into being in the 1500s.

What subordination to the world market means for capitalist producers in individual countries is that they are under non-stop pressure to produce ever more cheaply by introducing ever more efficient machinery and techniques of production. The result has been continuous technical and technological advance, a continuous development of the world’s capacity to produce wealth such that by the turn of the century it could be said that a sufficient plenty for all people on Earth could have been produced had global capitalism then been replaced by a society of common ownership and production to meet human needs not profit. But it wasn’t.

Capitalism continued. So did the growth of the world’s wealth producing capacity but in the century that is now coming to an end global capitalism also engendered two world wars and several world slumps, and still today millions of people on the planet go to sleep hungry or lack access to clean water or medical care or decent housing or education. All of which is a damning indictment of global capitalism.

As the American journalist William Greider has put it in a recent book:

For several decades the world’s capacity to produce food, for instance, has far exceeded the entire human population’s need for nourishment. Yet the stockpiles of unused foodstuffs pile up unsold each year in producing nations while somewhere else in the world hundreds of millions of others are malnourished, if not actually starving to death. The paradox is explained away easily enough in market terms. Indeed, the market insists that feeding impoverished people would be harmful to them, indulging their backwardness and postponing their eventual self-sufficiency. That answer may satisfy the marketplace, but for humanity it constitutes another great, unanswered question. Capitalism, for all its wondrous creativity and wealth, has not yet found a way to clothe the poor and feed the hungry unless they can pay for it (p. 468).

The title of his book—One World, Ready or Not: The Manic Logic of Global Capitalism—neatly sums up the socialist case against capitalism. Capitalism has brought into being “one world” as far as the production and distribution of wealth is concerned, but humanity is not ready to cope with this since it has not yet created the appropriate social arrangements and institutions; instead, the one world that has come into being is governed by the manic logic of production for profit rather than the human logic of production to meet people’s needs, with disastrous results.

Greider does not write as a socialist but he does employ, perhaps unknowingly, a quasi-Marxist approach. Here is how he presents the effects of what defenders of capitalism see as its most positive side—the non-stop technological development it brings about:

There is another dimension to the technological revolution, however, that is seldom discussed in the business books: the gathering vulnerability of an industrial system that is ruled by persistent excess supply. The same technological imperative that continuously reduces costs and improves quality has also generated a seemingly permanent and expanding surplus in the productive capacity of the world. Crudely stated, the technology competition leads companies to invest in more output of goods than the global marketplace of consumers can possibly absorb. New factories, designed to produce more from less, naturally increase the capacity for production, but the output potential expands faster than older less efficient factories are being closed. This underlying imbalance is compounded by the accelerating drive for globalization, as firms both modernize and rush to build new production in the developing markets. A perverse syllogism is thus at work, company by company, sector by sector: the burdensome presence of overcapacity quickens the price competition and threatens market shares, but the only obvious response is to create more new capacity—that is, to build new factories that will be more cost-efficient than one’s rivals . . . From a managers’ point of view, the challenge is to make sure that the market’s overcapacity becomes the other guy’s problem, that some other firm will be compelled to swallow losses in sales and close down its factories (pp. 103-4).

Marx, too, noted capitalism’s tendency to develop productive capacity without regard for the fact that consumption under it was limited by what people could afford to pay for; that, under the competitive pressures of the world market, capitalist firms were obliged to develop productive capacity irrespective of whether or not market demand was growing at the same pace, with the inevitable result that sooner or later one industry would overproduce in relation to its market triggering off a slump during which the least efficient firms were eliminated, so bringing market demand and productive capacity back into line.

But what sort of system is it where potential plenty represents a problem? And where there can be talk of “excess supply” when so many humans’ basic needs, let alone proper facilities for a decent life for all, remain unmet? Answer: a system which has solved the technical problem of how to produce plenty for all but which is incapable of delivering it because production is tied not to people’s needs but only to what they can afford to pay for.

Financial mania

Capitalism is not just industrial capitalism. In fact capital is not interested in producing things as such; it is only interested in profit expressed in money terms. Investing in the production of goods and services is an inconvenience which it has to go through in order to achieve its aim of ending up with a greater financial worth than it started with. Thus the purest form of capital is finance capital and, from the capitalist point of view, the most convenient way to make more money is to do so by financial dealings of one sort or another. It’s an illusion of course. It’s production, not finance, that makes the world go round. The financial world cannot go on feeding off rising paper asset values for ever. Reality must intrude at some point. But capitalism without finance capital is inconceivable; so too, therefore, is capitalism without financial crashes.

As Greider describes it:

Across many centuries, this story of finance capital’s capacity to become deranged in pursuit of higher returns has played out again and again in different forms of manias and crashes. Eventually, as history informs us, the disorders may be corrected in a grim, violent manner—a great war or a great depression. These events will destroy financial capital on a massive scale and thereby restore a balance between the demands of old wealth and the needs of new productive enterprises. This sort of resolution produces vast human suffering and political upheavals, of course, but also clears the way for capitalism’s next expansive era (p. 227).

Greider thinks that the world is now heading for another such financial crash but he is not writing as an opponent of capitalism. He quotes the British Labour MP Denis MacShane (“For years, socialists used to argue among ourselves about what kind of socialism we wanted. The choice of the left is no longer what kind of socialism it wants, but what kind of capitalism it can support”) and seems to agree with him. In any event, he describes himself as a “global Keynesian”; in other words, as someone who wants to employ failed Keynesian techniques of “market demand management” on a global scale so as to try to avoid global capitalism plunging the world into another global depression or war or both.

If you haven’t considered properly the socialist alternative of abolishing the world market and its manic logic, and setting up non-market institutions, at world, regional and local levels, to co-ordinate the production and distribution of what people all over the world want, this might well appear to be the only solution. After all, if global capitalism ignores the hungry, the homeless and the needy because, not having any money, they don’t constitute a market and so don’t count, why not just to pump more money into the system so that such people can come to count for capitalism? The winner of the 1998 Nobel Prize for Economics, Amartya Sen, who has written very clearly on the cause of famines (collapse of purchasing power not of production), also describes himself as a global Keynesian.

Global Keynesians are more advanced than those Greens who advocate local action in the face of global problems. They at least realise that the solution requires action at world level. Their mistake is that the global action they propose is not up to it. The global inflation that would result would probably make matters worse; certainly the financial speculators would love it.

The answer to the problems that global capitalism has engendered is not a policy, even if pursued at global level, that would still leave intact the basic structures and mechanisms of capitalism. It is something much more far-reaching: a rapid and radical change in the basis of world society that will make the Earth’s resources the common heritage of all humanity so that they can be used to further the common human interest.

Adam Buick